Wednesday, March 28, 2012

Lifetime Medical Spending

I often read statements like:

In the US the top 5% of medical spenders spend an average of $40,682 a year each, and account for 49.5% of all spending. (The bottom half spend an average of $236.)

I always think that is the variation in lifetime spending that matters most not the spending within a given year. So I dug up this link. It is for Canada but, though we spend much more in the USA, the relative differences should be similar. There are a couple of nice charts in the document. Here is some pertinent text:

In order to calculate the distribution of lifetime costs, we estimated the Markov models using Monte Carlo microsimulation trials (Figures ​(Figures44 and ​and5).5). As might be expected, lifetime costs are somewhat less skewed than are per capita costs in any single year. However, the distribution is far from normal; costs are not tightly grouped around the mean. For women, mean lifetime costs are $89,722, with a standard deviation of $38,776. Median costs for women were $86,125. Ten per cent of women incur lifetime costs of less than $43,843. For men, the mean is $64,052 with a standard deviation of $35,331. Median costs for men were $59,819, while 10% of men incurred lifetime costs of less than $22,450.

Interestingly many people’s lifetime spending is below $20,000. The middle 50% starts at about $60,000 and goes to about $140,000. The chart shows some at $260,000. I am sure that some people go way over the high number but their numbers are too small to show up.